Did Ways and Means Violate Section 6103 of the Tax Code?

An article posted yesterday by tax news and analysis website Tax Analysts questions whether the House Ways and Means Committee broke the law when it publicly disclosed confidential taxpayer information in a letter to US Attorney General Eric Holder last month.

At issue is whether the House panel violated Section 6103 of the Internal Revenue Code on April 9 when it voted to refer ex-IRS official Lois Lerner to the US Justice Department for criminal investigation, Tax Analysts reporter David van den Berg wrote.

The committee accused Lerner – the former head of the IRS Exempt Organizations division and a key figure in the agency’s targeting scandal – of depriving conservative groups of their constitutional rights, impeding official investigations, and putting confidential taxpayer information at risk.

The Ways and Means Committee voted 23 to 14 to publicly release its evidence against Lerner and to send a letter to Holder requesting he take Lerner to court. The letter, which was posted online by the committee, included 80 pages of exhibits and three tables listing organizations that had applied for tax exemption, the status of their applications, and any problems the IRS had identified in their submissions, van den Berg noted.

“Ways and Means staff maintain that the committee acted within its rights when it posted the organizations’ names and details online,” he wrote. “But several practitioners and scholars who spoke with Tax Analysts were skeptical of those assertions. Some said the committee may have broken the law.”

Congress enacted Section 6103 taxpayer confidentiality protections in the Tax Reform Act of 1976 to address pubic concern over government agencies’ use of taxpayer information, according to an October 2000 report by the Treasury Office of Tax Policy.

Van den Berg noted that, in general, the statute requires that tax returns and return information remain confidential except in cases when the tax code expressly says otherwise. The policy principle guiding Section 6103 is that the need for a particular piece of tax information must be balanced against a taxpayer's reasonable expectation of privacy, as well as the impact on continued compliance with the country's voluntary tax system, according to the Treasury report.

“One exception is within Section 6103(f), which stipulates that the Senate Finance and House Ways and Means committees may access confidential taxpayer information in closed executive session and may publicly share that information only after obtaining taxpayer consent,” he wrote.

“During the April 9 Ways and Means executive session to mark up the letter to the Justice Department, Camp said the letter would become public record upon its being voted to the House, a move he said was made under the authority of Section 6103(f)(4)(A) and after consulting with the House parliamentarian and counsel and with the Joint Committee on Taxation,” he continued.

Alan J. Wilensky, a Minneapolis tax attorney and former acting Treasury assistant secretary for tax policy, told van den Berg if an IRS employee disclosed confidential taxpayer information, the statute would speak for itself. But the committee's authority on whether it acted properly in disclosing the material it did is “grayer and more questionable,” he said.

“I don't know that they violated the letter of the law, but it seems to me they have violated the spirit of the law,” Wilensky said, according to the article.

When reached for comment, a Ways and Means spokesperson reiterated Camp's authority under Section 6013(f)(4)(A) to relay the taxpayer information to the House after consultation with the Joint Committee on Taxation, van den Berg wrote. When a committee submits material to the full House, it automatically becomes a public document, the spokesperson added.

The House of Representatives is slated to vote this week on a resolution to hold Lerner in contempt of Congress for refusing to answer lawmakers’ questions during two separate House Oversight and Government Reform Committee hearings regarding the IRS giving extra scrutiny to Tea Party and other conservative groups’ applications for tax-exempt status.